Despite record inflows into the U.S.-based spot Bitcoin ETFs, Bitcoin’s price remains stagnant. Even with a 19-day streak of inflows, Bitcoin has failed to surpass its all-time high of $73,679, set in March. Analysts and traders offer insights into this phenomenon
ETF Holdings and Their Impact
As of June 6, spot Bitcoin ETFs globally hold around 1.3 million Bitcoins. This accounts for about 5.2% of Bitcoin’s circulating supply. U.S.-listed ETFs hold a significant portion of this. Despite this substantial holding, ETFs alone aren’t driving Bitcoin’s price up.
Charles Edwards, founder of Capriole Investments, explains, “ETF flows are fantastic, but they are not strong enough to exceed the entire ecosystem selling (yet).” The market comprises spots, futures, ETFs, and options, all influencing the price.
Christopher Inks, a crypto trader, highlighted this complexity. “The price at any point in time is a product of all these, not just one of them,” he wrote.
Macroeconomic Factors and Geopolitical Events
Radar Bear, co-founder of a cryptocurrency exchange, points out that macroeconomic factors and geopolitical events heavily influence Bitcoin’s price. While ETFs are significant, they aren’t the sole determinants of price movements.
Market Expansion Needed
Data from Farside shows that Bitcoin ETF net inflows on June 6 totaled $217.7 million. Since their launch, spot Bitcoin ETFs have accumulated over $15.5 billion in inflows. However, some traders argue this amount isn’t enough to impact prices significantly until more markets open up.
Timothy Peterson, founder of Cane Island Alternative Advisors, notes the absence of spot Bitcoin ETFs in major markets like the U.K. and Japan. “There is lots of room to grow,” he says, suggesting that wider adoption could amplify the impact.
Long-Term Holder Movements
Edwards indicates that significant price surges depend on three major factors:
- Higher average ETF buying
- Reduced selling by long-term holders
- Growth in U.S. or global liquidity
Long-term holders, those who have held Bitcoin for over two years, are selling more frequently in 2024. This group’s share of the total Bitcoin supply has dropped to 54% over the past six months. Though a 3% drop might seem minor, it equates to about 630,000 Bitcoin, roughly three times the amount purchased by all U.S. Bitcoin ETFs.
Halving Effects
Edwards also mentions that the effects of the Bitcoin halving, which reduces daily Bitcoin issuance by 50%, haven’t been fully realized yet. “We likely haven’t seen the impacts of the Halving. We will likely see the delta between ETF consumption and Bitcoin mined widen substantially over the next 12 months,” he predicts.
Summary of Key Factors Influencing Bitcoin Price
- ETF Inflows: Significant but not enough to drive major price changes alone.
- Market Composition: Includes spot, futures, ETFs, and options, all affecting price.
- Macroeconomic and Geopolitical Events: Strong influencers on Bitcoin’s price.
- Market Expansion: Potential for growth if more markets adopt Bitcoin ETFs.
- Long-Term Holder Activity: Increased selling impacts supply and price.
- Halving Effects: Expected to influence price as supply decreases.
Despite the billions flowing into Bitcoin ETFs, the market’s complexity and broader economic factors play a crucial role in determining Bitcoin’s price. Future growth in ETF markets and changes in holder behavior could eventually lead to price surges.
Disclaimer
FAQ
Despite substantial inflows into U.S.-based spot Bitcoin ETFs, Bitcoin's price remains stagnant due to a combination of factors including market composition, macroeconomic influences, and increased selling by long-term holders.
As of June 6, spot Bitcoin ETFs globally hold around 1.3 million Bitcoin, which accounts for about 5.2% of Bitcoin's circulating supply.
Key factors include ETF inflows, market composition, macroeconomic and geopolitical events, market expansion potential, long-term holder activity, and the effects of Bitcoin halving.
